Has Apple peaked?
The world’s most valuable firm may be past its prime
Jan 26th 2013 |
TECH blogs are abuzz. Pundits are busy pumping out predictions. The company that makes the newdevice that is attracting so much attention is teasing reporters by being coy about its innovative
features. Apple’s product launches are always like this. But this time the fuss is not about an Appleproduct: it is about Samsung’s lates
t Galaxy smartphone, which is likely to be launched in March.Stiffer competition in smartphones and tablets from the likes of Samsung has spooked investors in Apple. They got another fright on January 23rd when the firm revealed that its latest quarterly profitof $13 billion was flat because of higher manufacturing costs. That triggered a rout in after-hours
trading: at one point some $57 billion was wiped off Apple’s market capitalisation, roughly the
equivalent of the entire value of Ford, a carmaker.
Apple’s shares have been mauled by bears many times before (see chart 1), but they have alwaysrecovered. The big question on many investors’ minds is whether the firm can rebound again. Twothings have whetted the bears’ appetites.
First, Steve Jobs, Appl
e’s founder and creative genius, is dead. The iPhones and iPads he sired still
generate gargantuan profits. But his successor, Tim Cook, has yet to prove himself capable of
bringing new breakthrough products to market. Second, Apple’s fantastic profit marg
38.6% onsales of $55 billion
attract competitors like sweetshops attract six-year-olds.
The company’s fans pooh
pooh the idea that Apple has peaked. The firm’s price
11.6 at close of business on January 23rd
is not much different from M
icrosoft’s (see chart 2). Thatmakes Apple’s shares look relatively sexy. Unlike Microsoft, which depends heavily on the ailing
personal-computer business, Apple concentrates on sectors that are growing fast, such assmartphones and tablets. Only one of 60
analysts tracked by Bloomberg had a “sell”recommendation on Apple before this week’s stockmarket fallout.